Is the Dubai property bubble about to burst?

September 28, 2025

Dubai has dominated global property headlines in recent years. A historic run of growth led many investors to the Middle East seeking the highest returns and other benefits, including the Golden Visa.

This trend carried on over 2025 – but are we seeing the beginning of the end for Dubai’s current property era? To put it another way: is the bubble about to burst?

‍

Dubai’s historic property growth run

The Financial Times reported in March 2025 that Dubai was on a run that could equal the record. 50 months of consecutive growth came close to the all-time high of 57 months following the 2008 financial crash.

This success was underpinned by a strong national economy and a liberalised visa system that was attracting high-net-worth individuals and businesses from all over the world.

Since 2020, the Dubai Statistics Centre estimates that the city’s population has grown by at least 500,000 people, to a total of more than 3.8 million. That’s real, serious growth which fuelled property value and rental increases.

Alec Smith, head of sales and leasing at Savills in Dubai, said that property values had increased more than 100% in the last four years. In the future, Dubai’s Urban Master Plan anticipates the population will grow to 4.6 million people, surely guaranteeing even further growth.

However, there are signs that the property bubble in Dubai may have reached its peak.

‍

Worrying signs have begun to emerge for Dubai property investors

We have begun to see potentially worrying signs for Dubai’s property market. The enthusiasm and positivity seen in Q1 have been left behind, and analysts are now wary of what the future might hold.

The biggest issue appears to be the potential for oversupply in the market. The population growth estimates from the Dubai Urban Master Plan are just that – estimates. The picture on the ground appears to be different.

Yes, the population is growing, and people from around the world are moving to Dubai. However, in reality, it is a relatively small group of people who would consider making that move, no matter how popular the idea is in business circles. Dubai is also not a big place. The city’s footprint and capacity are relatively small compared to global capitals like London or New York.

That makes recent reports in Reuters a worry for the housing market. The news agency says that 210,000 new homes are set to be delivered by the end of 2026 – doubling output from the last three years.

‍

How will an oversupply of homes in Dubai affect the market?

That level of new homes is sure to affect Dubai’s property market. Credit ratings agency Moody’s said it anticipated a “modest price correction starting in 2026” due to the coming oversupply.

Another credit agency, Fitch, said that it believes the fall in house prices could be as high as 15%.

Faisal Durrani, head of research in the Middle East for Knight Frank, shares these concerns. He said, “As we are approaching the fifth year, typically you would expect that rate of growth to start tapering or slowing down.

If all of the housing stock that is promised is delivered on time, then we do run the risk of an oversupply, which in theory would undermine house price growth.”

‍

Impact of the Dubai Rental Index (DRI) on rental returns in Dubai

The Dubai Rental Index (DRI) is a tool from the Real Estate Regulatory Agency (RERA) which standardises rental valuations and ensures fairer pricing for tenants. It provides:

Standardised valuations – Benchmarks based on similar properties in the area, so tenants can see if the quoted rent is fair.
Legal limits on rent increases – Rent cannot be increased by more than 20% without tenant consent.
Dispute resolution – It allows tenants to challenge unlawful rent increases via the Rental Dispute Settlement Centre

This Index means investors who buy in Dubai now cannot get the same rental increases that investors could have in the past. A 20% rent increase is still significant, but many people are being sold Dubai property based on much higher rental growth than they can legally achieve.

That means investors need to be wary and scrutinise their potential purchases more carefully than before. Are you being sold a property based on illegal rent forecasts? Are you buying based on past performance that is no longer possible?

‍

Dubai’s property resale market is shrinking

Dubai’s property market has always been highly speculative. This city is being built from the ground up, so the investment market is dominated by off-plan properties to a far higher degree than most other markets.

One group which has taken advantage is property ‘flippers’. They invest in off-plan properties and then sell on completion (or before) to immediately realise capital appreciation. This has previously been a profitable strategy. However, reports in Property Monitor show that might not be the case anymore.

According to the news outlet, resales of off-plan units have fallen considerably this year, down from 33% of the overall market to just 20%. While this is not a sign on its own that the market is about to decline, it does show that the fast profits drawing many investors to Dubai may be softening.

‍

Should investors buy property in Dubai in 2025?

When all the above information is taken into account, it seems that 2025 may not be the right time to invest in Dubai. There is no guarantee that growth will continue, and it is advisable to wait and see whether the market oversupply affects prices.

The picture may change in the future, but for now, the Dubai market seems unlikely to continue offering the level of returns that it did for people who bought five years ago. Buy-to-let investors looking for reliability and predictability should look elsewhere for now and reassess the Dubai market in 2027.

In contrast, the UK property market is at the very beginning of its next growth cycle. Both house prices and rents are forecast to grow strongly over the next four years, making this the ideal time to buy UK property and maximise your return on investment.

Want to learn more about UK buy-to-let property for sale? Contact our team today to discuss your strategy and discover our latest opportunities.

Is the Dubai property bubble about to burst?

You may also be interested in...

The rise of Manchester’s towers: What effect has it had on the city?

What effect is unstable America having on the UK property market?

Is the government going to meet its target of 1.5 million new homes?